Why this is important to Wisconsin businesses: The sector is expected to increase production rapidly in 2017, creating opportunities for Wisconsin suppliers of equipment and other products that support agriculture.
“The economy did not heal, but it stopped hurting.” So said a recent headline in a Brazilian newspaper. It refers mainly to industry performance and the fact that almost half of 26 industry sectors enjoyed a rise in production in December 2016 relative to the same month in 2015. Among the sectors that saw particularly high production growth were apparel (23.1%), manufacturing of computer equipment (29%), electronics and optics, automotive vehicle manufacturing, trailers and bodies (19.6%), machinery and equipment (12.8%), textiles (12.4%) and wood (10.2%).
For 2017, agriculture is the segment that is expected to boost the Brazilian economy. Brazil will produce a predicted 215 million tons of grain in 2017, an increase of 15 percent over 2016 levels. Because prices are generally better than last year, increasing income is expected to bolster the Brazilian economy. Early estimates indicate that the harvests now starting now should inject almost R$200 ($70 billion USD) into the economy this year.
Brazil already produces one ton of grain per capita. It is the fifth-largest producer of grains in the world, after Argentina, Australia, Canada and the U.S. The sector’s current expansion is due to two main factors: greatly increasing productivity and the intensive use of cutting-edge technology.
In 1990, Brazil produced 57 million tons of grains on 37 million hectares, or 1.52 tons per hectare. This year, it will produce 3.7 times more using only 1.6 times more land area. These numbers show that increasing agricultural production in Brazil does not come at the expense of deforestation and environmental deterioration, as some have claimed. Technology is being leveraged to improve productivity across many subsectors, including land preparation, seed production, cultivation and monitoring of planting, irrigation, harvesting, transportation and storage of crops. Brazilian farmers are increasingly using state-of-the-art equipment, ranging from geo-referenced seeders to the use of drones to control diseases and pests. Opportunities for Wisconsin exporters are especially strong in light of the fact that the exchange rate is forecast to stay at a low rate of approximately $1 USD to R$3.
Beyond Brazil’s strength in soybeans, corn, rice, beans and oilseeds, the country is also a major producer of sugarcane, coffee, cotton, potatoes, forest products, fruits, vegetables, livestock and poultry. Wisconsin makers of equipment and other products that support agriculture would be wise to pursue opportunities in Brazil.